The 6 es of Operational Audit
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Operational Audit at Penn is composed of the University Audit Team and the Penn Medicine Audit Team. In general, we are responsible for determining whether appropriate operational and financial internal controls are in place and operating properly throughout the institution’s operating units. The goal of every audit we perform is to provide a beneficial service to our clients
by identifying opportunities to enhance control processes and introduce efficiencies into your operations. Operational Audit routinely consults with Compliance, Privacy, and other subject matter experts as necessary to ensure the comprehensive delivery of quality services. We are committed to delivering our services in an independent, objective, and professional manner. Typical services provided by the Operational Audit Teams include the following: Provide an unbiased evaluation of processes, systems and operations and determine whether internal controls are in place and operating effectively to mitigate risks and ensure that organizational goals and objectives are met. Asses a unit’s adherence to applicable laws, regulations, policies and/or procedures. These would include adherence to the University’s internal policies and procedures as well as external requirements from federal, state, or
local agencies. Combine an operational/controls audit of an area with an information technology assessment of the systems and infrastructure that support the unit. An integrated audit can assess the effectiveness of the coordination between the information systems and the business activities to support defined goals and objectives. The nature and scope of these services are developed collaboratively with client
management and are intended to add value and improve the unit’s governance, risk management, and control processes without the internal auditor assuming management responsibility. Examples include providing advice and guidance pertaining to various administrative and compliance matters, advising on process redesign and the incorporation of internal controls into new systems and processes, etc. Generally involve both the Operational and IT Audit teams
during which we review the overall project management of the project, as well as assist in the design and deployment of effective internal controls for key business processes and ensure the implementation of sound security controls. These projects seek to determine whether: Evaluate the effectiveness of the system development after the system has been in production for a period of time (at least 6 months). The review results are provided to strengthen the system as well as system development procedures. The objectives are to determine whether the system does
what it was designed to do, for example: Independent evaluations of allegations generally focused on improper activities including misuse or theft of university resources, fraud, financial
irregularities, and unethical behavior or actions. During investigations we seek to confirm a loss/fraudulent act occurred, determine the amount of the loss, identify the control weaknesses that allowed the loss to occur, assist the unit by recommending corrective measures to prevent recurrences, and assist Human Resource, Public Safety, and the Office of General Counsel in the resolution of the case. Examining your business's internal processes on a regular basis ensures that all operations are running as efficiently as possible. Auditing can improve sales figures and reduce operational costs, making a business more competitive. Here's a look at how the process works and why an operational audit can be beneficial. What is an operational audit?An operational audit refers to the process of evaluating a company's operating activities – both on a day-to-day level and a broader scale. While other types of audits might look solely at a single department or the company's finances, an operational audit delves deeper. It serves as a detailed look at all of the internal departments and processes that make up a business's operations. Whereas a regular audit evaluates financial statements, an operational audit examines how a company conducts its business, with the aim of increasing overall effectiveness. Operational audits could be conducted by outside specialists or an internal audit team. Reasons to perform an operational auditThe aim of an operational audit is ultimately to optimize efficiency. By auditing the business's internal policies and procedures, the company can identify trouble spots and operate more effectively. The outcomes gleaned from the audit are most useful to the management team, who can take these recommendations on board to streamline future processes. Here are three of the primary outcomes of a successful operational audit:
Operational audit processA pre-audit meeting lays the foundation for the operational audit process. At this preliminary stage, the auditor sits down with the management team to gather relevant information. Collecting background information about the business helps identify any areas of concern or industry-specific challenges that need to be addressed. At this preliminary stage, the auditor will also thoroughly explain the auditing process to the managers. The auditor can then conduct interviews with managers in control of potentially risky areas. Objectives and activities are documented, with risks highlighted and sent back to managers for confirmation. Using the operational trouble spots, the auditor can design testing procedures at the control level. Tests are conducted, with results meticulously documented, to show which new processes or goals can improve the organization's efficiency. Finally, the auditor writes up a comprehensive audit report. Follow-up visits with management can help to finetune any ongoing issues with new systems or controls. Operational audit checklistThe specific areas of scrutiny in an operational audit will depend on the type of business being audited. We've outlined the general process above, but here is a quick operational audit checklist of procedures for better flow:
Operational auditing benefitsThere are many reasons to consider an operational audit. When performed by an outside party, it provides a business with an objective overview of company operations. These can yield new insights leading to improved sales, quicker production processes, and streamlined systems. Identifying risks ahead of time can future-proof the business against damages. Operational auditing challengesOne factor to consider before ordering an operational audit is that it does cost both time and money. When managers and employees are engaged with the audit, they will be pulled away from their usual activities. For complex organizations, an operational audit can be relatively time-consuming because each step of the process must be analyzed. Business owners should also be aware that operational audits can turn up unexpected problems that take time to repair. This might involve a complete overhaul of existing systems, requiring new training for employees. In the long run, these disruptions can be worth the trouble, should the operational audit lead to a more efficient method of doing business. We can helpGoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments. What are the 6 steps of an audit?Audit Process. Step 1: Planning. The auditor will review prior audits in your area and professional literature. ... . Step 2: Notification. ... . Step 3: Opening Meeting. ... . Step 4: Fieldwork. ... . Step 5: Report Drafting. ... . Step 6: Management Response. ... . Step 7: Closing Meeting. ... . Step 8: Final Audit Report Distribution.. What are the 7 es in operations auditing?The 7Es are effectiveness, efficiency, economy, excellence, ethics, equity, and ecology. The 7Es are design to help auditors add value to the organization and shows the clients that they really want to contribute to the organization's success. These seven elements are interconnected to each other.
What are the types of operational audit?Different Types of Operational Audits
Internal audits complement the work of operational audits, which includes some form of budget, or a financial review. Operational Audits: As noted, operational audits focus on the review and assessment of single or multiple business processes.
What are the 3 E's in auditing?The concepts of economy, efficiency and effectiveness, commonly referred to as the three E's, form the basis of any performance audit. Economy refers to the terms and conditions under which an entity obtains the required resources.
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